Question

In some cases, analysts notice that groups of similar investors tend to flock to stocks that have dividend policies consistent with their financial needs. This circumstance is an illustration of:

Answer 1

Answer:

the clientele effect

Explanation:

This scenario best illustrates the concept/idea known as the clientele effect. This is the idea that a set of investors that are attracted to specific security/asset will affect the price of it when policies or circumstances change. This is mainly due to the fact that as a group with lots of buying power, purchasing those assets removes circulating supply from that asset which causes the price to go up, meaning if things change they can also sell which will cause prices to drop.